JOHANNESBURG – The rand weakened on Friday, retreating from a near six-month high, as weak economic data at home and shrinking factory activity in China dampened risk demand.

Stocks fell, tracking a slump in global shares after the disappointing China data.

At 1524 GMT the rand was 0.74% weaker at 13.3450 per dollar, slipping back from Thursday’s close of 13.2475 – it’s firmest level since 8 August.

The currency surged earlier in the week after the US Federal Reserve kept lending rates unchanged and hinted it would hold off on raising interest rates, fuelling global demand for risk assets.

“When it comes to the local economy and the local currency, significant risks still exist,” said Peregrine Treasury Solutions’ corporate treasury manager Bianca Botes.

“The strength currently seen in the currency is mostly driven by weakness in major currencies such as the GBP and USD, and not because there has been a significant change in the outlook of the South African economic landscape.”

A survey showed on Friday that South Africa’s factory activity fell in January, led by slumps in new orders and business activity, while new vehicles sales for the month also declined, signalling the economy remains subdued.

In China, factory activity shrank by the most in almost three years in January as new orders slumped further and output fell, a private survey showed, reinforcing fears a slowdown in the world’s second-largest economy is deepening.

In fixed income, the yield on the benchmark South African 10-year bond rose 2.5 basis points to 8.615%.

On the stock market, the Top-40 index fell 0.54% to 47,697 points while the broader all-share was down 0.42% to 53,930.

Bourse heavyweight Naspers was the biggest loser on the blue-chip index, falling 3.1% to R2,945.

Shares that gained included ArcelorMittal South Africa Ltd, jumping nearly 7% after the company said it was likely to swing to a full-year profit.

EWN